Title: The woes of the container leasing industry

Authors: Dong-Hua Wang

Addresses: Department of Shipping and Transportation Management, National Taiwan Ocean University, No. 2, Pei-Ning Road, Keelung, Taiwan

Abstract: Keeping leased and owned containers in proper balance is vital to the success of ocean carriers. Despite the long-running debate about the advantages of renting versus ownership, the leasing industry had retained control of a relatively stable share of global container fleet before 2004. However, lessors' initial cash investment return (ICIR) generated from new-build dry freight leases has been falling inexorably over the period of study (1992-2008). By assuming perfect substitution between owned and leased containers in container shipment, this paper finds that the Leontief cost functions is a good model in explaining leasing industry's long-run decline in ICIR.

Keywords: container leasing industry; initial cash investment return; ICIR; ratio of owned/leased containers; container/slot operating ratio; Shephard duality theory; ocean carriers; Leontief cost functions.

DOI: 10.1504/IJSTL.2014.057811

International Journal of Shipping and Transport Logistics, 2014 Vol.6 No.1, pp.7 - 25

Accepted: 21 May 2013
Published online: 24 May 2014 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article